The Chief Electoral Officer discloses highlights from the financial reports of provincial and municipal political parties for 2011

June 19, 2012

Quebec City, June 19, 2012 ––The Chief Electoral Officerof Québec, Jacques Drouin, today disclosed the financial reports of Québec’s 18 provincial political parties for the fiscal year ending December 2011. In accordance with the provisions of the Election Act, the deadline for filing 2011financial reports for political parties was April 30, 2012, whereas it was April 1, 2012 for party authorities and other authorized entities. The various reports are published in two different documents, with the first volume presenting information concerning the financial situation of the provincial political parties and the second containing the lists of persons having made contributions to political entities.

The Chief Electoral Officeris alsopublishing today an information document for the general public entitled “Statistics concerning thefinancial reports of provincial and municipal political parties.” The financial reports and the statistics document are available on the Chief Electoral Officer’s website at www.electionsquebec.qc.ca.

2011: A year of change

Concerning the financing of provincial and municipal political parties, 2011 was a year of major change given that last year the new provisions of the Election Act came into force, in particular those designed to prevent financing in the name of another.One significant aspect of the reform resides in the fact that since May 1, 2011, practically all provincial political contributions are made directly to the Chief Electoral Officer, who verifies their compliance before forwarding them to the authorized political entity concerned.

As such, from the beginning of May until the end of December 2011, the Chief Electoral Officer received 25,726 contributions, for a total of nearly $3.6M. For its part, the verification of compliance especially targeted the following elements: the elector’s signed statement confirming, among other things, that the contribution has been made out of the elector’s own property and will not be reimbursed; the contributor’s status as a qualified elector; respect for the annual contribution limit; and compliance as regards the method of payment of the contribution. A 99% compliance rate was noted at the end of the verification process.

Another notable change is that information concerning contributors is now made available on the Chief Electoral Officer’s website within 30 working days of the cashing of contributions. Thus the names of all contributors will appear on the published list, no matter how much they contributed.

An annual auditing plan

Generally speaking, in addition to specifically verifying compliance of the contributions that he receives, the Chief Electoral Officer implements an annual auditing plan as regards the financial reports of provincial and municipal political parties. First of all, teams of auditors from the political party financing office review all the reports in order to ascertain their apparent compliance with the law and with the Chief Electoral Officer’s directives. As a second step, a certain number of financial reports undergo a more thorough audit. In this case, books of account and all supporting documents are especially scrutinized concerning the entries of funds and expenses of a provincial party authority or a municipal political party.

Through the review and audit process, it is possible to address observations and recommendations to provincial political entities and municipal parties. It is also possible to evaluate each financial report according to “a respect for financing rules index.” The best evaluation that a financial report can obtain is “compliant” and the worst, “significant non compliance.” The way that a party manages its contribution collection, borrowings, and guarantee deposits, as well as its revenues from political activities and rallies, along with how it administers its expenses, determines the score earned by the provincial political authority or municipal party for its financial report.

By assembling the scores of all the audited financial reports on a statistical base, it is possible to develop an overall portrait of the degree to which the rules of financing for political parties are being respected. The most recent compilation (cf. the table on page 5 of the statistics document) shows, for example, a weakness as regards how municipal parties administer their revenues from political activities and rallies (for instance, cocktails and fundraising meals), especially with respect to management of entrance fees. This sort of observation has already led the Chief Electoral Officer to recommend legislative changes to ensure that the rules are better respected. Bills 113, 114 and 118, adopted at the end of 2010, represent a step in the right direction in this regard.

At the provincial level: grassroots financing and state participation in 2011

One of the foundations of the political party financing system is that only electors may make a contribution, with the ceiling being lowered from $3,000 to $1,000 per party, per MNA and per authorized independent candidate in 2011. Contribution revenues collected by the authorized political parties in 2011 reached $7,515,482, on total revenues of $13,226,916, i.e. 56.8% of these revenues. Contributions were 15.2% lower than in 2010.

The summary of contributions collected by each of the political parties represented at the National Assembly may be found on pages 37 to 41 of the statistics document.

To the amounts raised by the parties in the form of contributions, are added the sums provided by the Chief Electoral Officer in the form of an annual allowance based on the number of votes garnered by each of the parties during the previous general election, as well as reimbursements of audit fees and election expenses. In 2011, the Chief Electoral Officer provided $4,735,271 in allowances, compared to $2,980,434 in 2010. This rise of nearly 59% may be explained by an increase in the base amount from 50 cents to 82 cents per elector, applied from the end of 2010 in calculating the allowance.

The exact amount paid to each political party for 2011-2012 is provided on page 54 of the statistics document.

The provincial political parties and their financial operations in 2011

The number of authorized parties increased from 16 to 18 during 2011, with the highlight no doubt being the authorization, in November, of the Coalition avenir Québec party, merged under that name with Action démocratique du Québec, on February 14, 2012. The Nouvelle Alliance Québec-Canada party was dissolved in 2011, while two parties, Option nationale and Québec – Révolution démocratique, were authorized by the Chief Electoral Officer.

In 2011, the political parties and their authorities, along with independent MNAs and authorized independent candidates, accumulated $13.2M in revenue, an increase of 2.8% compared to the previous year. Contributions by electors represent 56.8% of this revenue, while the Chief Electoral Officer’s allowance covers 35.8% of the total. The expenses incurred by the parties and their authorities reached $12.6M, an increase of 5.8% compared to 2010.

Among the parties represented at the National Assembly in 2011, only the Parti québécois completed its fiscal year with more expenses than revenues, running an operating deficit of $137,000. The financial results for the various political parties are presented on page 23 of the statistics document.

As regards net assets, all parties represented at the National Assembly, except Action démocratique du Québec (ADQ), finished 2011 with a surplus. In the case of the ADQ and its authorities, the accumulated deficit was $666,129 as of December 31, 2011. Tables indicating the parties’ net assets are presented on pages 32 and 33 of the statistics document.

The financial reports of the municipal political parties

The Act respecting elections and referendums in municipalities (AERM) stipulates that municipalpolitical parties must file their annual financial report with the municipal treasurer by April 1 of each year. The Chief Electoral Officer receives copies of the reports, from which he may retrieve data to be disclosed for the first time in the document entitled “Statistics concerning thefinancial reports of provincial and municipal political parties.” This represents general information concerning the political parties, along with financial data for 2011. It should be pointed out that municipalities with fewer than 5,000 inhabitants are not governed by the financing rules outlined in the AERM.

Among the 179 Québec municipalities subject to the financing rules, 81 had at least one political party at the end of last year. On December 31, 2011, there were 140 municipal political parties in Quebec. Last year, three new municipal political parties obtained authorization, while 25 parties filed for deauthorization, i.e. to put an end to their own existence.

The financial reports of the municipal political parties for 2011reveal revenues totalling a little over $4.3M and expenses reaching approximately $3.7M. On December 31, the parties’ total net assets were $1.9M. It should be noted, however, that approximately 20% of all political parties were running an accumulated deficit.

In 2011, 71.6% of the revenues of municipal political parties came from their own municipality, which reimburses some election expenses, along with audit fees. In municipalities with 50,000 or more inhabitants, the parties’ research and office costs are also reimbursed in accordance with the Cities and Towns Act. It should also be pointed out that in Quebec City and Montreal, political parties are entitled to an allowance similar to the one received by provincial political parties from the Chief Electoral Officer .

Another source of revenue for municipal political parties is the collection of contributions, under the supervision of the official representative and in compliance with the rules outlined in the AERM. In 2011, the sum total for contributions collected reached a little over $1M, representing 25.5% of the revenues of municipal political parties.